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Multiple Outputs in Port Cost Functions

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  • Jara-Di­az, Sergio R.
  • Martinez-Budri­a, Eduardo
  • Diaz-Hernández, Juan José

Abstract

By describing the technical process, in this article we argue that cargo that arrives in many different forms are distinct outputs of a port, whose services require inputs that can be grossly defined as labor, space, facilities, and equipment. Then we show theoretically and empirically that the use of aggregate output in the presence of distinct outputs causes erroneous conclusions on marginal costs, on economies of scale, and on optimal industry structure.

Suggested Citation

  • Jara-Di­az, Sergio R. & Martinez-Budri­a, Eduardo & Diaz-Hernández, Juan José, 2006. "Multiple Outputs in Port Cost Functions," Research in Transportation Economics, Elsevier, vol. 16(1), pages 67-84, January.
    • Handle: RePEc:eee:retrec:v:16:y:2006:i:1:p:67-84
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    References listed on IDEAS

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    1. Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
    2. John C. Panzar & Robert D. Willig, 1977. "Economies of Scale in Multi-Output Production," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 91(3), pages 481-493.
    3. Sergio Jara-Díaz & Beatriz Tovar De La Fé & Lourdes Trujillo, 2005. "Multioutput analysis of cargo handling firms: An application to a Spanish port," Transportation, Springer, vol. 32(3), pages 275-291, May.
    4. Sergio Jara-Díaz & Eduardo Martínez-Budría & Cristiín Cortés & Leonardo Basso, 2002. "A multioutput cost function for the services of Spanish ports' infrastructure," Transportation, Springer, vol. 29(4), pages 419-437, November.
    5. Kim, Moshe & Sachish, Arie, 1986. "The Structure of Production, Technical Change and Productivity in a Port," Journal of Industrial Economics, Wiley Blackwell, vol. 35(2), pages 209-223, December.
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    Cited by:

    1. José Holguín-Veras & Sergio Jara-Díaz, 2010. "Optimal Two-Part Pricing and Capacity Allocation with Multiple User Classes and Elastic Arrivals at Constrained Transportation Facilities," Networks and Spatial Economics, Springer, vol. 10(4), pages 427-454, December.

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